Why the Huckaby Trust Failed: An Asset Protection Attorney

A couple in South Lake Tahoe signs a Nevada spendthrift trust in 2011, deeds their house into it the same day, and names themselves settlors, trustees and sole lifetime beneficiaries. Fifteen years later a federal judge rules that a judgment lien runs through the trust to the husband’s half of the house and that the United States may foreclose. We see the same three-roles-in-one-person pattern in trusts clients bring us for review, and this article is the planning lesson, not the case note.

Three roles, one person

The facts in United States v. Huckaby were undisputed. Robert Huckaby and Joyce Tritsch bought a house in South Lake Tahoe on August 29, 2005, as joint tenants.

On October 17, 2011, they executed the Circle H Bar T Trust, a self-described Nevada spendthrift trust, and deeded the house into it that day. They were its settlors, its trustees and its sole lifetime beneficiaries.

On March 30, 2018, a judgment was entered against Huckaby for failing to honor IRS levies; by June 15, 2025, the balance was $87,959.84. The United States sued in March 2023 to enforce the judgment against the house [1].

Every role a protective trust depends on keeping apart was held by the same two people. The settlor gives property away. The trustee holds legal title and determines distributions.

The beneficiary holds the equitable interest. When one person is all three, nothing has left the giver’s hands in any sense a court will respect. The government did not need to prove a sham; the trust instrument proved that Huckaby held both legal and equitable title.

Source: United States v. Huckaby (E.D. Cal. Mar. 2, 2026) [1]

The land picks the law

The defendants argued that the trust said Nevada, so Nevada law applied, and Nevada permits a settlor to be a beneficiary of a spendthrift trust. Judge Drozd accepted half of that.

Applying the Restatement (Second) of Conflict of Laws, he held under section 277 that a trust of land is construed under the law it designates. So the trust is read as a Nevada document. But the question was not what the trust means.

It was whether a creditor can take land the trust holds, and for that question section 280 points to the law of the situs. The situs was California [1].

California’s rule is short. Under Probate Code section 15304(a), as the court read it, a spendthrift restraint is invalid against the creditors of a settlor who is also a beneficiary.

The trust itself remains valid. The court cited Ninth Circuit authority that California voids self-settled trusts so that individuals cannot put their property beyond their creditors while still reaping the bounties of that property [1].

The defendants’ fallback, that section 15304 should not apply because the house went into the trust seven years before the judgment, found no support in the text. A self-settled interest is reachable whenever the creditor comes.

A footnote adds that the government said the house went into the trust about one month after it served Huckaby with the IRS levy. The court did not need to rule on the point. Had the trust been properly built, that gap would have been the government’s case, since Nevada’s own statute excludes a trust intended to defeat known creditors [1] [2].

The lesson: a governing-law clause is a sentence in a document, not a change in where the house stands. And a protective trust is funded years before the first letter, not a month after it.

Nevada’s own statute was not met

The court never ruled on whether the Circle H Bar T Trust qualified under Nevada law. It almost certainly did not.

NRS 166.015(2) applies if the settlor is a beneficiary. At least one trustee must then be a natural person domiciled in Nevada, or a trust company or bank with a Nevada office.

That trustee keeps the records and prepares the returns, with part of the administration in Nevada [3]. On the record in the opinion, the only trustees were the two California settlors.

NRS 166.040 sets the terms on which a settlor may be a beneficiary at all. The trust must be irrevocable, with no required payment to the settlor and no intent to hinder, delay or defraud known creditors. The settlor may keep a good deal: a veto over distributions, the use of trust property, the power to replace trustees and direct investments, even a seat as co-trustee.

The one thing the settlor may not hold is the power to distribute to himself without another person’s consent [2]. That exception is the whole design. Huckaby and Tritsch kept that power for themselves and wrote a trust no state’s protective statute covers.

A lien follows the interest

The last question was whether Huckaby had an interest in the house at all, given that he held title as trustee. Under California law a beneficiary holds the equitable interest and is regarded as the real owner; the trustee holds legal title. Huckaby was both.

A federal judgment is a lien on all real property of the judgment debtor under 28 U.S.C. 3201(a). So the lien encumbered his one-half interest, and the government could propose a foreclosure order, subject to a priority stipulation with the other lienholders [1] [4].

A tax lien proper runs the same way. Under 26 U.S.C. 6321 an unpaid assessment is a lien “upon all property and rights to property, whether real or personal, belonging to such person” [5].

Drye v. United States sets the two steps: state law defines the taxpayer’s rights, and federal law determines whether they are property the lien covers [6]. Under 26 U.S.C. 7403 the court may decree a sale of any property in which the taxpayer has “any right, title, or interest” [7]. No state statute changes the federal half of that analysis.

What Nevada still protects

None of this makes a Nevada or Delaware trust useless to a California resident. It narrows what the trust can hold.

NRS 166.170 bars a creditor who existed at the time of the transfer unless it sues in time. The deadline is the later of two years after the transfer or six months after it discovered or should have discovered the transfer. A creditor who arose later has two years, and a recorded deed counts as discovery.

Either way the creditor must prove by clear and convincing evidence that the transfer was fraudulent under NRS chapter 112 or violated an enforceable contract or court order [8]. NRS 166.120 directs the trustee to disregard attachment, garnishment and other process against the beneficiary’s interest [9].

Those provisions govern where Nevada law governs. For brokerage and bank accounts and interests in companies, the trust’s designated law has a far stronger claim than it does for land in another state. That is where a Nevada trust earns its fee for a Californian: the liquid estate, held by a Nevada trustee, administered in Nevada, funded long before any claim.

Sources: [1] [2] [3] [5] [8]

Delaware asks the same questions

Delaware’s Qualified Dispositions in Trust Act rests on the same two ideas. A qualified trustee under 12 Del. C. 3570(8) is a Delaware resident other than the transferor, or a Delaware-supervised bank or trust company, that materially participates in administration.

The transferor may keep a veto over distributions and the power to replace trustees. A creditor whose claim arose after the transfer must prove actual intent to defraud, within four years, by clear and convincing evidence. Unlike Nevada, Delaware carves out spousal and child support, divorce property division, and tort claims for injury on or before the transfer [10].

Rule	Nevada	Delaware	California
Settlor as beneficiary	Permitted if irrevocable, no required payments, no intent to defraud known creditors	Permitted as a qualified disposition	Restraint invalid against settlor’s creditors
Required trustee	At least one Nevada resident, bank or trust company	At least one Delaware resident or institution, not the transferor	No protective statute
Creditor window	Two years from transfer, or six months from discovery for existing creditors	Four years for later creditors; pre-existing claims per 6 Del. C. 1309	None
Standard of proof	Clear and convincing	Clear and convincing	Not applicable
Exception creditors	None in the statute	Spouse and child support, divorce division, pre-transfer torts	All creditors

Sources: [1] [2] [3] [8] [10]

The choice between them turns on the exception creditors. Neither helps if the trustee is you.

How to hold California property

No self-settled trust, in any state, reliably protects a California residence from a judgment creditor while the settlor lives in it. Planning can change the character of what the trust holds and remove the settlor from the roles that sank Huckaby.

One structure often proposed is to hold out-of-state real estate through a limited liability company owned by the trust. The theory is that an LLC interest is personal property that follows the owner’s law rather than the land’s. We would call a different result possible, not probable.

A court that sees a single-member LLC holding the settlor’s own home will look through it as readily as it looked through the Circle H Bar T Trust. The structure suits investment property, not the house you sleep in.

1. Separate the roles. Name a Nevada or Delaware trustee or trust company as distribution trustee. Keep only what the statute allows: a veto, investment direction, the power to replace the trustee.
2. Administer where you say you are. Records, returns and part of the administration in the trust state, by that trustee.
3. Put the right assets in. Liquid and intangible assets first. For investment real estate, hold the entity interest, not the deed.
4. Fund it early and record it. The Nevada window runs two years from the transfer, and recording starts the period for existing creditors. A transfer after a levy or demand is the case you lose.
5. Treat the residence separately. Homestead exemption, umbrella insurance and title planning for the home; the trust protects the rest.

Our earlier note set out the court’s reasoning in detail [11]. The planning point is simpler than the opinion.

A trust protects what you have given up. If you are the settlor, the trustee and the beneficiary, you have given up nothing, and a court will say so.

This article is for general informational purposes only and does not constitute legal advice. Outcomes depend on the facts of each matter and no result is guaranteed. Reading it does not create an attorney-client relationship with Dilendorf Law Firm. Prior results do not guarantee a similar outcome. Attorney Advertising.